CALGARY, Aug. 13, 2009 (Canada NewsWire via COMTEX) ----Guest-Tek Interactive Entertainment Ltd., ("Guest-Tek" or the "Company") (TSX:GTK), a leader in providing broadband technology solutions to the global hospitality industry, announced results today for the three months ended June 30, 2009, the Company's first quarter of fiscal 2010 ("first quarter, Fiscal 2010", "Q1, 2010" or "Q1, Fiscal 2010"). The Company has recorded its first quarter of net income for 4 years and has also recorded its sixth consecutive quarter of positive adjusted EBITDA(1). Adjusted EBITDA improved to $779 thousand in Q1, 2010 from $146 thousand in Q1, 2009. The Company's interim consolidated financial statements for Q1, Fiscal 2010, along with the related notes and Management's Discussion and Analysis can be found on www.sedar.com.

Arnon Levy commented, "I am very pleased to report net income for the quarter and our sixth consecutive quarter of positive adjusted EBITDA, which is a reflection of our ongoing management of cost of revenue and operating costs."

The Company's performance for the three months ended June 30, 2009 ("first quarter, Fiscal 2010," "Q1, 2010" or "Q1, Fiscal 2010") showed significant improvement over the three months ended June 30, 2008 ("first quarter, Fiscal 2009," "Q1, 2009" or "Q1, Fiscal 2009"). Revenue for Q1, 2010 was $10.14 million compared to $9.89 million for Q1, 2009. The Company also saw a slight decrease in gross margin in Q1, 2010 compared to Q1, 2009. Gross margin as a percentage of sales decreased to 39.2% in Q1, Fiscal 2010 compared to 40.6% in Q1, Fiscal 2009. Operating expenses decreased to $3.80 million in Q1, Fiscal 2010 compared to $4.53 million in Q1, 2009. The Company showed net income of $173 thousand for Q1, 2010 compared to net loss of $389 thousand for Q1, 2009. Adjusted EBITDA improved significantly to $779 thousand in Q1, 2010 from $146 thousand in Q1, 2009. Significant events for the quarter include:

   <<
   -   Installed OneView Internet and OneView Media VOD and IPTV at Hyatt
   Siesta Key and The Pierre New York;
   
   -   Substantially completed a project to upgrade 68 Starwood hotels
   assumed from Sprint to OneView Internet;
   
   -   Completed installations of OneView Internet converged networks at the
   W Washington DC and W Aloft BWI;
   
   -   New contracts signed to provide OneView Internet and OneView Media
   VOD and IPTV to St. Regis Deer Crest and Inn at the WAC;
   
   -   New contract signed to provide The Fantasyland Hotel a high
   definition in-room entertainment system over Shaw coax lines;
   
   -   Installation of OneView Internet in 4,938 rooms, with a total
   supported base of 435,215 rooms;
   
   -   Installation of 306 OneView Media rooms, with a total service base of
   8,399 rooms;
   
   -   Revenue totaling $10.14 million during the quarter;
   
   -   Net income of $173 thousand; and
   
   -   Adjusted EBITDA of $779 thousand.
   >>
   
   

Revenue

Overall, revenue increased 2.5% to $10.14 million for Q1, Fiscal 2010 from $9.89 million for Q1, 2009. Revenue decreased 8.0% from $11.02 million recorded in Q4, 2009. The increase in revenue compared to the same quarter a year ago is due to an increase in HSIA recurring revenue and an increase in VOD revenue. The decrease in revenue compared to Q4, 2009 is due to a decrease in HSIA installation revenue.

Gross Margin

Gross margin decreased 1.1% to $3.97 million in Q1, Fiscal 2010 compared with $4.02 million in Q1, Fiscal 2009, due to an increase in installation costs. Gross margin decreased 1.7% from $4.04 million in Q4, 2009, on decreased revenue due to a large number of low-revenue installations. Key components of cost of revenue include hardware costs, personnel costs for the professional installations team and call center costs such as personnel and telecommunications.

Operating Expenses

Total operating expenses decreased 16.1% to $3.80 million for Q1, Fiscal 2010, compared to $4.53 million for Q1, Fiscal 2009, and decreased 75.6% from $15.60 million for Q4, 2009. The decrease in operating expenses compared to Q1, Fiscal 2009, is mainly due to a reduction in legal expenses of $409 thousand. This was due to the settlement of a lawsuit in Q1, 2009. There is also an increase in the foreign currency loss of $213 thousand, offset by reductions in all SG&A items, particularly in salaries and benefits and commissions. The significant decrease in operating expenses compared to Q4, 2009, is due to a write off of goodwill of $11.77 million in Q4, 2009. Absent these write-downs, operating expenses for Q4, 2009, were $3.83 million. Operating expenses as a percentage of revenue were 37.5% for Q1, Fiscal 2010 compared to 45.7% for Q1, Fiscal 2009 and compared to 34.8% for Q4, 2009, absent the write off of goodwill.

About Guest-Tek

Guest-Tek is the world's largest provider of IP based technology solutions for the hospitality industry. Guest-Tek's OneView platform provides hotels with converged data, video and telephony services. Guest-Tek is a preferred vendor to major hotel brands, providing services including network design, procurement, implementation, and post sales customer support to 2,668 properties and 443,614 rooms. Guest-Tek's common shares trade on The Toronto Stock Exchange under the trading symbol "GTK". The company's head offices are in Calgary, Alberta, and it has major support facilities in Irvine, California, and Warsaw, Poland as well as Sales offices located throughout North America and Europe. For more information about Guest-Tek, go to www.guest-tek.com.

The above disclosure contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Guest-Tek's control, including: the impact of general economic conditions, industry conditions, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to the announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. Guest-Tek's actual results, performance or achievement could differ materially from those expressed in, or implied by these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that Guest-Tek will derive therefrom.

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   GUEST-TEK INTERACTIVE ENTERTAINMENT LTD.
   Consolidated Balance Sheets
   (Unaudited)
   June 30, 2009 and March 31, 2009
   -------------------------------------------------------------------------
   June 30, 2009   March 31, 2009
   -------------------------------------------------------------------------
   Assets
   
   Current assets:
   Cash and cash equivalents               $   3,444,485    $   2,155,523
   Accounts receivable                         5,436,246        7,763,457
   Installations in progress                   1,249,334        1,526,987
   Inventory                                     916,999        1,005,453
   Prepaid expenses and deposits                 923,809        1,024,083
   
   -----------------------------------------------------------------------
   11,970,873       13,475,503
   
   Property and equipment                        3,202,144        3,461,605
   Deferred costs                                6,770,673        6,686,554
   Intangible assets                             3,693,751        3,807,750
   Goodwill                                              -                -
   -------------------------------------------------------------------------
   $  25,637,441    $  27,431,412
   -------------------------------------------------------------------------
   -------------------------------------------------------------------------
   
   Liabilities and Shareholders' Equity
   
   Current liabilities:
   Accounts payable and
   accrued liabilities                    $   3,972,145    $   5,125,927
   Customer deposits                           1,863,959        2,474,822
   Deferred revenue                            2,247,410        2,121,226
   Current portion of notes payable            1,516,442        1,771,644
   -----------------------------------------------------------------------
   9,599,956       11,493,619
   
   Deferred revenue                              5,250,750        5,391,314
   
   Deferred leasehold inducement                    17,863            5,932
   
   Notes payable                                         -                -
   
   Future tax liability                          1,077,306        1,066,815
   
   -------------------------------------------------------------------------
   6,345,919        6,464,061
   -------------------------------------------------------------------------
   15,945,875       17,957,680
   -------------------------------------------------------------------------
   
   Shareholders' equity:
   Share capital                              53,779,555       53,779,555
   Contributed surplus                         3,127,238        3,081,968
   Deficit                                   (47,215,227)     (47,387,791)
   
   -----------------------------------------------------------------------
   9,691,566        9,473,732
   -----------------------------------------------------------------------
   -----------------------------------------------------------------------
   
   -------------------------------------------------------------------------
   $  25,637,441    $  27,431,412
   
   -------------------------------------------------------------------------
   -------------------------------------------------------------------------
   
   
   
   GUEST-TEK INTERACTIVE ENTERTAINMENT LTD.
   Consolidated Statements of Operations, Comprehensive Loss and Deficit
   (Unaudited)
   Three months ended June 30, 2009 and 2008
   -------------------------------------------------------------------------
   2009             2008
   -------------------------------------------------------------------------
   
   Revenue (note 6)                          $  10,139,764    $   9,893,255
   
   Cost of revenue                               6,164,944        5,874,867
   -------------------------------------------------------------------------
   
   Gross margin                                  3,974,820        4,018,388
   
   Operating expenses:
   Selling, general and administrative         2,772,402        3,739,087
   Research and development                      247,476          201,155
   Amortization of property and equipment        175,914          165,944
   Amortization of intangible assets             143,931          170,285
   Amortization of internally
   developed software                            93,403           75,327
   Foreign currency loss                         282,300           70,697
   Stock based compensation                       45,270           57,490
   Interest expense                               37,709           45,524
   -----------------------------------------------------------------------
   3,798,405        4,525,509
   
   -------------------------------------------------------------------------
   Income (Loss) before interest income
   and income taxes                               176,415         (507,121)
   
   Interest income                                     464            2,564
   
   -------------------------------------------------------------------------
   Income (Loss) before income taxes               176,879         (504,557)
   
   Income tax expense (recovery)                     4,315         (115,908)
   
   -------------------------------------------------------------------------
   Net income (loss) and
   comprehensive income (loss)                    172,564         (388,649)
   
   Deficit, beginning of period                (47,387,791)     (34,142,021)
   
   -------------------------------------------------------------------------
   Deficit, end of period                    $ (47,215,227)   $ (34,530,670)
   -------------------------------------------------------------------------
   -------------------------------------------------------------------------
   
   Net income (loss) per share:
   Basic                                   $        0.01    $       (0.02)
   Diluted                                          0.01            (0.02)
   
   Weighted average number of shares:
   Basic                                      15,825,852       15,825,852
   Diluted                                    16,951,859       15,825,852
   
   
   
   -------------------------
   (1) Adjusted EBITDA is earnings before interest, taxes, depreciation,
   amortization, gain or loss on sale of assets and stock based
   compensation expense and is provided to assist investors in assessing
   the Company's performance. Adjusted EBITDA has no standardized
   definition in Canadian GAAP and therefore may not be comparable to
   similar measures presented by other companies. Management believes
   that Adjusted EBITDA, in addition to net income, is a useful
   indication of performance and the Company's ability to generate cash
   from operations. Please see the reconciliation of Adjusted EBITDA to
   net income included in the Company's MD&A for the period ended June
   30, 2009.
   >>
   
   

SOURCE: Guest-Tek Interactive Entertainment Ltd.

Arnon Levy, President & CEO, Guest-Tek, (403) 444-8488, arnon.levy@guest-tek.com;
   David Simpson, Interim CFO, Guest-Tek, (403) 444-8486, david.simpson@guest-tek.com
   

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